H&M Profit Drop

2018 has not started in the best way for the retail brand H&M with controversy surrounding their clothing advertisements and now bad news about their performance in 2017 as shoppers move online and stores struggle to attract large numbers of customers.

Biggest Fall in Profits

H&M have announced a profit drop of 14 percent for the period of November 2016 to November 2017. This is their biggest drop in profits for the last six years. This result can partly be attributed to their unexpectedly poor performance in their last quarterly figures where their profits fell by a huge 34 percent.

The share price for H&M has also seen a drop of over 9 percent which has taken their share price to a nine year low point. The H&M chief executive, Karl-Johan Persson, has issued a statement saying that all retailers are being challenged by changes to the industry and that he expects this to continue throughout 2018. He added that H&M do not expect to reach their target for growth in sales this year. The sales growth figure had been set at 10 – 15 percent for 2018.

New Plans

In a bid to improve their financial performance, H&M have announced plans to close approximately 170 stores and to launch a new discount store, Afound, later in 2018. H&M also intend to launch one more independent brand in their stores this year in order to continue attempts to widen their customer demographic.

The retailer will also start to sell the H&M Home and H&M brands on Tmall, which is an e-commerce site, in March 2018.

Reinvestment

Although H&M have announced that their dividend to shareholders will remain unchanged, it has been announced that the board of directors is currently considering whether to provide all of their shareholders with the chance to reinvest their share dividend in new shares.